Small-scale internet traders, including individuals and businesses who sell goods on websites such as eBay and Amazon, are being hit with ‘tougher penalties’ than larger businesses if they do not declare their income and pay the appropriate tax on their sales, according to a new study.

The research, which has attracted much media attention of late, suggests that HM Revenue & Customs (HMRC) is issuing increasingly hefty penalties to such traders under its ‘deliberate defaulters’ programme, which dishes out fines to those who consciously avoid paying tax.

According to reports, ‘defaulters’ who sell goods online are being issued with penalties demanding around 59 per cent of the amount of tax owed – on top of paying back that initial amount.

In comparison, larger businesses are rarely asked to pay fines of more than 50 per cent of the tax due. In fact, reports suggest that in some cases such firms will be fined as little as 35 per cent.

Concerns have been raised that many online traders could be unaware that they need to pay tax on their online income at all – or believe that their online earnings will go unnoticed by HMRC regardless.

However, back in January, the tax authority announced that it had begun collecting data on users of online marketplaces such as eBay and Amazon as part of a long-running campaign to tackle tax avoidance.

An HMRC spokesperson said: “We are clear that everyone must play by the same rules, and pay the taxes due under the law. This applies to online trading and to more traditional platforms.

“When you are selling goods for profit, HMRC must be notified through the trader’s tax return,” they added.

“Our penalties are focused on the minority of people who try to get around the rules. Our most recent figures show that last year HMRC brought in a record £26bn in extra tax for our public services, money that would otherwise have gone unpaid”.